Homeowners warned about being under-insured as building costs soar

Soaring construction inflation has left homeowners with insurance policies that will not fully cover rebuilding costs, a new study claims.

Most homeowners rarely check the likely cost of rebuilding their properties should they be damaged or destroyed, says research by insurer Allianz.

The firm’s Home Rebuild Research Study shows that 56 per cent of homeowners have not checked this cost within the last year, despite sharp rises in the price of most construction materials.

About one in five homeowners have never checked rebuilding costs at all, while many do not understand the difference between this and the property’s market value.

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“The results suggest that many Irish homeowners could potentially be underinsured on their properties due to the sudden and unexpected increase in the cost of building materials,” says the insurer.

Allianz warns that construction inflation is likely to worsen this year as labour costs are poised to rise by 4.4 per cent over the coming 12 months.

A home’s market value is the price someone is willing to pay to buy it while rebuild cost is the bill an owner would face to repair or reconstruct their home if it’s damaged or destroyed.

Geoff Sparling, chief customer officer of Allianz, urged homeowners to inform themselves of the likely rebuild cost and take steps to avoid being caught out by inflation.